Newsday buy to blame for slump
Cablevision capped an eventful fiscal year with a $321.4 million net loss in the fourth quarter, compared with a net profit of $6.6 million in the year-ago period.
The loss was caused by an impairment charge of $402.4 million related to Newsday, which Cablevision bought for $650 million last summer. Another charge of $41 million was taken for winding down Voom HD Networks.
Plenty of skeptics on Wall Street questioned the acquisition of Newsday at a perilous time in the newspaper biz. Execs defended the move during a conference call with analysts Thursday, saying they are well equipped to manage it in a way that makes it more profitable.
One key to their strategy, they disclosed during the call, is to charge visitors to the Newsday website, a move that would run counter to the industry trend toward an ad-driven free model. The New York Times, along with several magazine publishers, recently abandoned its pay-for-access plans.
“We plan to end the distribution of free Web content,” said chief operating officer Tom Rutledge. “Our goal was and is to use our electronic network assets and subscriber relationships to transform the way news is distributed.”
Among operating units, the dominant Telecommunications group, which includes cable, Internet and voice services, posted a solid 11% rise in operating income to $297 million.
Other units had less rosy results. At Madison Square Garden, which includes sports teams, regional and national cable nets and live-music venues, operating income plunged 86% to $8.8 million due to higher costs.
Rainbow Media, which houses Sundance Channel, IFC, AMC and We, swung to an operating loss of $9.2 million from a year-ago profit of $34.7 million.
Total company revenue increased 11% to $2 billion.
Cablevision shares shed 6¢ to close at $13.31. They’ve been depressed for the last several months as all cable companies cope with subscriber defections and a fierce ad downturn, both driven by the recession.